Germany Skirts Recession but Worries Remain

There
is not a semblance of a doubt that the global economy is currently
going through a slowdown and falling demand, but it becomes a bit
more alarming if one of the world’s biggest economies finds itself
on the precipice of a recession. According to data published by the
Federal Statistics Office in Germany, the economy remained static and
remained static, however, did not actually contract. Had that
happened, then Germany would officially have been in the middle of a
recession. Two consecutive quarters of economic shrinking is
generally regarded as a recession. In the third quarter, the German
economy contracted by 0.2%.

It
is an alarming time for Europe’s largest economy, which had
recorded robust growth over the years but the signs of a slowdown
were apparent in 2018. The biggest reason behind the slowdown is the
poor performance of Germany’s export, and that has a lot to do with
shrinking orders from different parts of the world. The larger
slowdown in the global economy has also bitten Germany exports
figures and needless to say, it has made for a weak performance for
the country on the trading front. In addition to that, consumer
spending remained muted. For instance, the uncertainty over the
emissions regulations, many German citizens stayed away from
purchasing new cars. Automobile remains one of the most important
industries in the country.

Jack
Allen of the economic consultancy firm Capital Economics said, “If
you look at Germany across 2018 we’ve seen a pretty broad-based
slowdown in growth. We’ve seen household consumption slow, we’ve seen
business investment slow, and we’ve seen export growth slow. What’s
particularly worrying is that the early signs for 2019 suggest that a
strong rebound is unlikely.”

However,
there are more worries round the corner for Germany as the United
States, under the leadership of President Donald Trump could impose
steep tariffs on cars that are imported from the European Union. The
US President has threatened to impose those tariffs in the past.
However, experts believe that, if all things remain the same, the
slowdown in the global economy is going to have a big effect on the
German economy. Economists believe the German economy will grow by
around 1% in 2019. On the other hand, economists like Claus Vistesen
believe that a turnaround is round the corner and believes the
numbers in the first quarter are going be much better. It remains to
be seen what comes to pass.

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